📝 Case For Fed Rate Hikes May Fade: ING

The jobs market recovery looks less impressive when you exclude private health/social care and hospitality. Those sectors account for only a quarter of jobs, but two thirds of jobs growth so far this year. Yes, hiring has improved elsewhere, but not nearly as rapidly as the headline figures imply. And crucially, there’s very little sign that this improvement is feeding into broader wage pressure.

That’s one reason why inflation fears should start to recede as the year goes on. Another is housing. Kevin Warsh himself acknowledged this week that policy still looks restrictive when you look at what’s happening there. And as James Knightley argues in his excellent piece today, rents are barely rising – something that should increasingly pull core CPI lower given housing’s huge weight in the index. Add lower fuel prices, a reversal of recent air fare spikes and the fading impact of tariffs and the case for rate hikes looks much less compelling. - ING